Tax Planning 11- Interest deductibility limits for passive business activities Flashcards

1
Q

What is the holding period of common stock to determine if a dividend is qualified and therefore receives preferential tax treatment?

A

Stock must be held more than 60 days during the 121-day period begins 60 days before the ex-dividend date.

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2
Q

What is the ex-dividend date?

A

The first day following the declaration of the dividend on which the buyer of the stock is not entitled to receive the next dividend payment

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3
Q

Each dividend payment needs to be qualified on its _______.

A

Each dividend payment needs to be qualified on its own.

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4
Q

Dividends paid by _____ ______ _______ are eligible for the__________ rates.

A

Dividends paid by closely held businesses are eligible for
the preferential rates.

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5
Q

Dividends paid on____ _______ ________that are
readily tradable on U.S. securities markets are eligible for
the preferential rates

A

Dividends paid on foreign corporation stocks that are
readily tradable on U.S. securities markets are eligible for
the preferential rates

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6
Q

What are the three preferential tax rates for qualified dividends?

A

0, 15, 20

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7
Q

When does 3.8% surtax kick in for qualified dividends?

A

When AGI hits certain thresholds

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8
Q

What is the holding period of preferred stock to determine if a dividend is qualified and therefore receives preferential tax treatment?

A

90 days during the 181 period that begins 90 days before the ex-dividend date.

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9
Q

What are three criteria a foreign corporation must meet for the purpose of qualified dividend rules?

A
  1. Incorporated in the US
  2. Eligible for income tax treaty with the US
  3. Stock is tradeable in an established US securities market
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10
Q

What is not a qualified dividend?

A

Distributions from tax-exempt cooperation or farmers or farmer’s cooperatives
Nonqualified foreign corporations
Dividends paid on deposits with mutual savings banks, credit unions, and similar financial institutions
Capital gain distributions
Dividends from a corporation on employer stock ownership

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